Finance minister AHM Mustafa Kamal recently announced the areas and mode of untaxed money investment as he placed the budget in parliament for the 2020-2021 fiscal starting from July 1.
The Small and Medium Enterprise (SME) sector has been ravaged by the two-month shutdown as 41 per cent of organisations have shutdown because of supply chain disruptions, piling up of and stagnant prices of unsold products. The sector has lost about Tk 92,000 crore – an amount that could build three Padma bridges. Only 48 per cent of the entrepreneurs hope they could be able to sustain nominally even after suffering huge losses during the shutdown caused by the Covid-19 outbreak.
The Covid-19 has led to a complete income stop for 23.2 per cent of people with below Tk15,000 monthly pay while the salary reduced for around 58 percent. Only 18.51 per cent of people are sustaining their regular earnings at this income level. Income stopped for 6.46 per cent of people with monthly income of Tk 30,000 or above and reduced for 39.4 per cent. Over 53 per cent with the higher income level are sustaining their regular income.
In such a situation where is the need for a huge budget revenue collection? Rather the existing 2019-20 budget which already has an unallocated amount of over Tk 85,000 crore should be used to stimulate aggregate demand. In this situation revenue officials are reportedly chasing people and companies aggressively to maximise collections by the year amid huge collection deficit caused by global economic crisis and nationwide shutdown in the wake of Covid-19 pandemic.
The primary task of the administration should be to jumpstart aggregate demand. The only way to do that is to ensure that people have increased disposable income as consumption drives the economy and creates jobs — thus perpetuating a cycle of expansion and growth. So spending money on vanity projects which will not generate enough employment is right now a diversion of funds from where they are needed most.
So instead of spending in big ticket items we need to stimulate spending by giving people more money in their hands. A very easy way to do that is to reduce taxes or make them available in installments. No sustainable growth will occur if our people dont spend any money.
Through lockdown and shutdown only a few people and the lucky ones in government have not been deprived of income. Most are relying on whatever saving they have. The corona created economic disturbances exists everywhere in the world. Even in rich countries it is a daily headache of the government as to how to generate income among the people in distress. Our government has no such worry whether they can attend the office regularly or not they get their salaries in time.
The economic hardship of the people under pandemic must be taken into consideration. There should be lockdown on tax collection.
